Methodology for enhancing the international applicability of the SASB Standards and SASB Standards Taxonomy updates

We refer to the International Sustainability Standards Board’s consultation on its proposed methodology for enhancing the international applicability of the SASB Standards, published on 11 May 2023. We appreciate the opportunity to contribute our perspective.

Norges Bank Investment Management is the investment management division of the Norwegian Central Bank (Norges Bank) and is responsible for investing the Norwegian Government Pension Fund Global. NBIM is a globally diversified investment manager with 12,429 billion Norwegian kroner at year end 2022. We are a long-term investor, working to safeguard and build financial wealth for future generations.

As a long-term, global investor, we consider our returns over time to be dependent on sustainable development in economic, environmental and social terms. We need consistent, comparable and reliable information from companies on social or environmental issues which are financially material to their business. We rely on information related to the current performance of a company, as well as information on drivers of value that may be predictive of its long-term performance. This information helps inform our investment decisions, our risk management processes and our ownership activities. We therefore have strongly supported the important work of the International Sustainability Standards Board in developing a global baseline for sustainability reporting standards.

NBIM welcomes the objective of the International Sustainability Standards Board to enhance the international applicability of SASB Standards, to ensure that entities can apply the SASB metrics irrespective of the jurisdiction they operate in. This is particularly important given the role that SASB Standards play in the architecture of IFRS S1, which requires preparers to consider them both (a) to identify relevant sustainability risks and opportunities and (b) to identify what information to disclose. The SASB internationalisation project will be particularly beneficial to support non-US based entities in this second stage of development of their sustainability disclosures development, i.e. the identification of the information to be disclosed.

Given the finalised nature of the IFRS S1 and S2 standards, we concur with the ISSB’s considerations about the objective and constraints of this project, namely enhancing the international applicability of SASB Standards without substantially changing their structure or intent. These constraints are necessary to ensure a swift implementation of the project, and thereby allow entities to use SASB Standards as a source of guidance, particularly if they start adopting IFRS S1 on a voluntary basis ahead of jurisdictional adoption. We agree with the proposed methodology in the exposure draft, particularly the suggested prioritisation of Revision Approach 1, which relies on the identification of internationally applicable references. Regarding Revision Approach 2, which entails the provision of generalised references, NBIM considers that guidance would be helpful to minimise implementation challenges. We believe that Revision Approach 3, while potentially offering the advantage of higher certainty to preparers, would not achieve the objective of cross-jurisdictional comparability; in other terms, its use would enhance the international usability of SASB but not the comparability of disclosures. Lower reliance on this approach might therefore be warranted, although we do appreciate the requirement for entities to disclose the applicable jurisdictional laws or regulations used in order to provide clarity for users. On Revision Approach 5, which entails the ISSB developing a new metric to replace the original jurisdiction-specific metric, we suggest that the Board considers other reporting frameworks and standards to enhance interoperability whenever appropriate, notably the European Sustainability Reporting Standards and the Global Reporting Initiative.

Regarding future steps, the ISSB should conduct a more comprehensive review to ensure that the SASB Standards are fully internationally applicable and consistent with both the logic and architecture of the recently finalised IFRS S1 and S2. Updates could for example be made to the SASB standards to ensure that their structure is consistent with the description of sustainability-related risks and opportunities provided by the ISSB, as well as their four-pillar architecture. IFRS Sustainability Standards should ultimately include industry-specific requirements alongside general requirements and topical standards, as has been case for the climate standard IFRS S2. The strategy and timing for formally elevating the status of the SASB standards from guidance to binding component of the IFRS Standards should also be clarified.

We appreciate your willingness to consider our perspective, and we remain at your disposal should you wish to discuss these matters further.

Yours sincerely

Carine Smith Ihenacho
Chief Governance and Compliance Officer

Elisa CencigSenior
ESG Policy Adviser